Kanban is a visual signal that something needs to be replenished. Lean Manufacturers today use Kanban to drive a process to make, move, or buy the appropriate parts. Thus, Kanban becomes one of the fundamental building blocks of a pull (or consumption based) replenishment system. No card? No Replenishment.

Paper kanban intent has efficacy; the reality of cluttered transport routes, overflowing finished goods stores, immense quantities of WIP (work-in-progress) and unscheduled machine downtimes, often make the merits of this lean manufacturing functionality questionable. When there are also frequent complaints about delivery problems, the reality is quite distant from the theory. Poor implementation of kanban is quickly overcome in an e-kanban environment.

Sue Via, Senior Project Engineer with TechSolve (www.techsolve.org) suggests that Kanban is only part of the lean process, “Kanban is a higher order concept and many things must be in place before implementation of the concept is feasible. For instance, the foundation of Standard Work, 5S/Visual Management, and Quality at the Source must be in place and functional. All affected processes should go through an initial lean transformation to eliminate waste, establish Flow and initiate a Pull mindset. All processes including equipment must be reliable in order to minimize the inventory requirements.”

Two of the primary limitations of a manual (or paper based) Kanban system are data availability and scalability. According to Justin Diana, VP of Datacraft Solutions (www.datacraftsolutions.com), “In a typical manual Kanban implementation, most transactions and orders are placed with faxes and emails and recorded in an Excel spreadsheet. At the end of the day, this information is limited to the individual managing and recording this data. The individuals responsible for growing and improving the process, have limited or no visibility to the data. As the number of parts, suppliers, and cells grow, managing this process only becomes more convoluted.”

e-kanban, in contrast, focuses specifically on centralizing and managing all of the mission critical data. Real-time transaction capture and tracking builds a repository of information, ripe for process improvement analysis. Allowing an e-kanban system to handle and manage the collation and reporting of this data helps to remove the element of human error prevalent within a manual kanban system.

The difference between kanban (a signal to trigger specific quantities of supplies in a just-in-time system) and e-kanban, is working more efficiently and effectively with a lean process. Blanket Purchase Orders, Internal SuperMarket Consumption Signals Replenishment, and Breeding proactive suppliers are three Direct Benefits of Lean e-Kanban. Justin Diana also suggests that, “One other limitation to a manual kanban system is the unpredictable and undependability of the communication... questions such as did they get it? Do they understand it? Am I going to get it? keep buyers awake at night.” Indeed, e-kanban collaboration erases those fears. Electronic records of pull requests, receipt timestamps and electronic acknowledgements all work towards a more unified and dependable method of pull communication.

Via suggests that even e-kanban may have limitation in certain environments: “Electronic kanbans are effective when distance is a factor in the process; such as multiple buildings, locations; however, it may be too time consuming when the handoff points are adjacent or close to each other; such as different departments or processing equipment.”

Once the discipline and visual aspect of kanban has been implemented internally, the next logical step is to apply the process externally to outside supplying entities. Lean Manufacturing relies heavily on trusted relationships with those suppliers and pre-negotiated terms of engagement. Through the use of quality certification and blanket (long-term) Purchase Orders, the manufacturer can accurately and effectively calculate the optimal level of inventory needed to fulfill demand requirements through the duration of Replenishment lead time. At the end of the day, effective kanban is the sum of a simple calculation.

e-kanban products must provide a steady and predictable demand over a forcastable period, supplied by an entity that provides virtually defect free product in the negotiated period of time in the negotiated quantity at the negotiated price.

e-Kanban: Vendor requirements

When a relationship is setup with a supplier a service level agreement is defined. Items such as negotiated lead times, packaged quantities, order receipt confirmations, and advanced shipment notices must all spelled out very specifically. An e-kanban system monitors that each of these service level agreements are being met by the supplier in real time. If they are not, a series of alerts and notifications starts to be issued to all interested and affected parties. This gives everyone a chance to adjust their behavior to bring performance back in line in real time.

e-kanban also captures all of this real time information and makes it available for historical analysis. It is made available over the internet twenty-four hours a day, so that all parties can see trends in performance. Late shipments, short shipments, and other supply chain performances are all captured and presented in terms of percentage of conformance to the service level agreement. These visuals give everyone in the supply chain information about how to focus their continuous improvement energies.

e-Kanban: Only one Lean Manufacturing component

e-kanban is heavily based on Lean and Six Sigma principles and tools, and the ability to effectively support a production system is critical to Best Practices. e-kanban is a critical Lean element focused on improving flexibility through the elimination of waste; e-Kanban is focused on quantifying the flexibility so that manufacturers and suppliers can rapidly evaluate the true capability of the system to respond to a specific change. Even a Lean production system could struggle to accurately respond to a new order requirement from a customer because it would take longer to identify the source of the constraint and begin resolving it. Implementing pull systems (e-kanban) with more customers is the increasing direction of manufacturing operations utilizing lean. Via argues that e-kanban only makes sense as part of an overall lean process, “Kanban in conjunction with other Lean concepts focuses on Just-in-Time delivery and the reduction of inventories. An effective kanban system requires that all non-value-added activities be eliminated or reduced in order to shrink the required Lead Times.”

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Author Profile:
Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based TR Cutler, Inc., the largest manufacturing marketing firm worldwide – www.trcutlerinc.com. Cutler is the founder of the Manufacturing Media Consortium of two thousand journalists writing about trends in manufacturing. Cutler is the lead spokesperson for the ETO Institute (www.etoinstitute.org). Cutler is also the author of the Manufacturers’ Public Relations and Media Guide. Cutler is a frequently published author within the manufacturing sector, more than 200 feature articles annually, can be contacted at trcutler@trcutlerinc.com or 954-486-7562.